Which of the following is a true statement about inventory systems? A perpetual system determines cost of goods sold only at the end of the accounting period. Periodic inventory systems require more detailed inventory records. A periodic system requires cost of goods sold be determined after each sale. Perpetual inventory systems require more detailed inventory records.

Perpetual and Periodic Inventory Systems Below is a list of inventory systems options. a. Perpetual inventory system b. Periodic inventory system c. Both perpetual and periodic inventory systems Required: Match each option with one of the following: 1. Only revenue is recorded as sales are made during the period; the cost of goods sold is recorded at the end of the period. 2. Cost of goods sold is determined as each sale is made. 3. Inventory purchases are recorded in an inventory account. 4. Inventory purchases are recorded in a purchases account. 5. Cost of goods sold is determined only at the end of the period by subtracting the cost of ending inventory from the cost of goods available for sale. 6. Both revenue and cost of goods sold are recorded during the period as sales are made. 7. The inventory is verified by a physical count.

Perpetual versus Periodic Inventory Systems Graham Company is trying to select an inventory system. Below are several statements that pertain to inventory systems. 1. Cost of goods sold is only determined at the end of the period after a physical count of inventory. 2. A physical count of inventory is performed. 3. Purchases of inventory are recorded in a purchases account. 4. Cost of goods sold is determined continually during the period as sales are made. 5. Greater control over inventory is possible. 6. This inventory system is relatively inexpensive to operate. Required: Select the inventory system, perpetual or periodic, that is best represented by each statement. If the statement applies to both systems, select both.

Which of the following is a disadvantage of the perpetual inventory system? A. Inventory information is in real-time. B. Inventory is automatically updated. C. It allows managers to make current decisions about purchases, stock, and sales. D. It is cost-prohibitive.

Explain why a company might want to utilize the gross profit method or the retail inventory method for inventory valuation.

Does the use of a perpetual system eliminate the need for taking a physical inventory count?

Which inventory costing method is almost always done on a perpetual basis? A. specific identification B. first-in, first-out C. last-in, first-out D. weighted average

A JIT inventory management system maintains which of the following? a. Goods should be pushed through the system on a fixed schedule based on anticipated demand. b. Goods should be pulled through the system by present demand. c. Total inventory costs are minimized by balancing setup and carrying costs. d. Inventories are needed to avoid stock-out costs.

Under the periodic inventory system, the ending inventory is entered by debiting Merchandise Inventory and crediting Income Summary.

Rules of debit and credit for periodic inventory accounts Complete the following table by indicating for A through G whether the proper answer is debit or credit: